CoreWeave ups its spending forecast as revenue guidance falls short, and its stock sinks

Shares of the cloud data center company CoreWeave Inc. were trading more than 8% lower after-hours following mixed first-quarter earnings results and a lower-than-expected forecast for the current quarter.

The company also increased its capital expenditures spending forecast, further eroding investor confidence in what has been one of the hottest stocks on Wall Street so far this year.

CoreWeave reported an adjusted loss per share of $1.12, which was worse than the 90-cents-per-share loss expected by Wall Street. Revenue for the period rose 52%, to $2.08 billion, well ahead of the Street’s $1.97 billion target. Ultimately, the company’s net loss grew to $740 million, up from a loss of just $315 million in the year-ago period.

For the second quarter, CoreWeave said it’s targeting revenue of between $2.45 billion and $2.6 billion, trailing the Street’s forecast of $2.69 billion by a pretty wide margin. For the full year, CoreWeave maintained its earlier guidance range of between $12 billion and $13 billion. Wall Street is looking for $12.53 billion in annual sales.

At the end of the quarter, the company said it had approximately 3.5 gigawatts of total contracted power and a $99.4 billion revenue backlog.

CoreWeave is the original and best known of the “neoclouds,” which are a new generation of cloud services providers that focus exclusively on artificial intelligence workloads. Unlike traditional hyperscalers such as Amazon Web Services Inc. and Google Cloud, which also support general-purpose computing workloads, CoreWeave is primarily concerned with offering GPUs-as-a-service, which enables companies to rent graphics processing unit workloads for AI training and inference.

The company has established a close relationship with the world’s No. 1 GPU provider, Nvidia Corp., which has become its most important supplier, as well as an investor and a key customer. Like other neoclouds, CoreWeave is trying to surf the wave of demand for AI computing capacity and is scrambling to scale its infrastructure to support that. In 2022, the company generated revenue of just $22 million, but just three years later it had grown that number to more than $5.1 billion, and its forecast calls for more than double that number this year.

“We have reached hyperscale,” co-founder and Chief Executive Michael Intrator (pictured) told analysts on a conference call. He explained that the company has also diversified its customer base, with 10 clients spending at least $1 billion on its products and services. That’s a big change from 2024, when 62% of its sales went to Microsoft Corp.

However, the main reason why CoreWeave’s revenue is growing so fast is because it’s spending even faster. The company’s operating expenses relating to technology and infrastructure increased 127%, to $1.27 billion, in the quarter, while sales and marketing expenses hit $69 million, up more than sixfold. It has been racing to build out new data centers as fast as it can, but unlike highly profitable rivals such as AWS and Microsoft, it cannot dip into its enormous cash flow to fund this, because it doesn’t exist. So instead it has been borrowing heavily.

During the previous quarter, the company took on approximately $8.5 billion in new debt, shortly after securing new contracts with Anthropic PBC and Meta Platforms Inc., as well as the AI startups Perplexity AI Inc. and Cline Bot Inc. That brings its total amount of new debt and equity secured so far this year to more than $20 billion.

While those debts may worry some investors, the company also received a vote of confidence when Nvidia bought an additional $2 billion in CoreWeave stock in January, while committing to more compute capacity. In another positive development, S&P Global Inc. upgraded its credit rating on CoreWeave from stable to positive during the quarter, according to Chief Financial Officer Nitin Agrawal.

CoreWeave might seem like it’s jumping straight into the deep end, but its strategy is really not that much different to Amazon.com Inc.’s during the early days of its e-commerce business, said Andrew Rocco a strategist at Zack’s Investment Research. He said it’s sacrificing short-term profits in an effort to try and corner the market, and that requires massive amounts of borrowing to execute.

“It’s a classic land-grab in an extremely capital-intensive industry, with scale and market share being prioritized over immediate net income in return for high margin recurring income later on,” Rocco explained. “From this perspective, the strategy appears to be working. My main takeaway is that the company’s backlog reached nearly $100 billion and that it was the strongest bookings quarter in history. If investors are willing to stay the course, CoreWeave positions itself to be a dominant player in the AI infrastructure industry.”

For fiscal 2026, CoreWeave now anticipates capital expenditures to reach between $31 billion and $35 billion, up from a prior forecast of $30 billion to $35 billion that it gave in February. The revision stems from higher component prices, Agrawal said.

“It’s an issue, it’s a problem, but we have an incredible capacity to navigate the supply chain,” Intrator told analysts when asked about these challenges. “We have great partners, and we include the pricing that is required in order to end up delivering the infrastructure that’s required, but also ensuring that we’re able to secure the economics that we’re targeting.”

Despite today’s slump, CoreWeave’s stock remains one of the technology industry’s strongest performers, and has still gained more than 79% in the year to date.

Photo: Bloomberg Live/YouTube